Why 30% environment cess on diesel cars will be disastrous for India

Major carmakers like Maruti Suzuki and Honda did not have diesel technology and it is in the last 3-4 years that they invested in diesel vehicles owing to shift in demand towards such models

No one will invest in India and the country's image as an investment destination will be completely thrown out of gear if an environment cess to the tune of 30 per cent were to be imposed on diesel cars and SUVs, according to auto industry body SIAM.

With the Supreme Court asking Delhi Police to pay an environment compensation cess of 30 per cent of the real value of new vehicles as a pre-condition for their registration, SIAM is hoping that no such conditions are imposed on purchases by ordinary customers.

"If they put 30 per cent tax it's gone. Investments will go, future investments will get finished and no one will invest in the country. The image of the country as an investment destination will be completely be thrown out of gear," Society of Automobile Manufacturers (SIAM) director general Vishnu Mathur said.

Stating that most multinational companies whether they are Japanese, American or Korean, have invested in diesel technology in India, he said, "Everyone has got diesel portfolio and everyone is watching very closely how India decides to go ahead with its policy".

"If you have a policy and you do not abide by it that means that we are not a destination that can be trusted. Why should anybody invest here? Most investments from companies are frozen right now," Mathur said.

Major carmakers like Maruti Suzuki and Honda did not have diesel technology and it is in the last 3-4 years that they invested in diesel vehicles owing to shift in demand towards such models.

"Toyota has recently come up with a Rs 1,000 crore (Rs 10 billion) diesel plant. All this is because of government policy. No company has violated the government policy or gone beyond it. It's been done as per government policy," Mathur said.

Commenting on the ban on diesel cars and SUVs above 2,000 cc, Mathur said: "We are the first country in the world which banned the sales of state-of-the-art vehicle that is available while doing nothing about old vehicles."

He further said: "Our view is very clear that if a product is meeting all the government statutory norms for emissions there is no justification in calling it a polluting product or a polluting industry."

Photograph: B Mathur/Reuters